The Death of Traditional Automotive Retailing – What’s next?
How Big Data and Connectivity Can Save the Automotive Industry.
With digitalisation comes a new breed of customer. Through the internet, customers are now more informed, connected, and empowered in their purchasing experience. Within automotive retailing, customer purchasing patterns are changing, too. While the trend is moving towards shorter ownership periods, brand loyalty is becoming a much stronger factor for consumers.
In 2014, 44% of consumers were willing to purchase a car online, and the average number of visits to car dealers has plummeted from 7 to 1.5 per purchase, with many customers spending more time researching online, utilizing social media and car comparison websites. When the stakes are this high for dealers and manufacturers alike, the perfect customer experience should be intuitive, highly personalised, and hassle-free. That is, in an ideal world.
When a Marketing Strategist Meets a Car Dealer
My own purchase experience was…well, completely different. Over the last couple of months, I was in the process of picking a new vehicle. The usual story. I had whittled my options down to a few models, and began my journey on my chosen manufacturer’s website. This part of the process was great; I could customise my purchase online, visited comparison sites, and research competitors. Feeling informed, I booked a test drive via the manufacturer’s website, which sent me to the nearest local dealer. This is when things started to go downhill.
While the dealer knew my name and the model I was interested in, this was the limits of his knowledge. Not only were my personalised specifications unavailable to him, the QR-scannable codes on my printed out spec sheets were neither used nor asked for. After two test drives, the purchase process involved tediously re-entering the very same specifications, printing it as a PDF file, and hand-writing the final cost. I later received an unbranded email from the car dealer confirming my order. When asked, he told me that he had input the very same specifications to an entirely different system. The time it took him? 45 minutes.
It came with no surprise that I received no post-purchase communication. No product/service upsells, no ‘welcome on-board’ messages, not even a ‘thank you’ for parting with a considerable sum of cash. The only thing to remind me of my purchase was a targeted ad of the very car I had purchased, which followed me redundantly on various pages I browsed on the internet. The wasted marketing budget on that, alone, made me wince.
Overall, the experience was a hassle and, like many customers, I could’ve easily dropped out of the sales process because of this. While my overall experience was inconvenient, it helped to highlight an important issue that is hamstringing the automotive retailing industry – the disconnect between manufacturer and dealer.
The digital world has brought with it an era of interconnectedness that can’t be ignored. There’s a persistence of the traditional model in the automotive industry – of manufacturer and dealer as separate entities that offer separate, disconnected services. In current climes, this persistence is death. For the manufacturer-dealership relationship to survive, an industry-wide revolution is needed, and ‘big data’, and the connectivity of said data, lies behind that revolution.
Dealerships: personalised brand ambassadors, or inconvenient middle-men?
Car dealerships are a manufacturer’s physical sales representative. They’re the functional, everyday interface between manufacturer and customer. The argument over the necessity of independent car dealerships is already heated, with the likes of Tesla pushing for autonomy over the sales process in recent years.
While dealerships offer a valuable service to both manufacturer and customer, in order to preserve their survival, they need to – at the very least – ensure that their clients experience a seamless transition from manufacturer’s website to car showroom.
There are a few ways that this can be achieved, and big data lies behind these. ‘Big data’, as a concept, is simply the application of vast quantities of information to useful means. In the case of the automotive industry, by using customer information from the manufacturer’s end such as preferences, personal details, and other information, dealers can make the customer’s experience hassle-free and highly personalised.
Systems need to be developed where information is gathered from multi-channel sources. Dealerships still offer a valuable service; one-to-one interaction in person, and the ability to test drive your vehicle of choice. With the help of big data and the appropriate tools, dealers can play to their strengths of one-to-one service in a digitalising world.
There’s no doubt that inconvenience and inefficiency sends customers running to the hills, and that is what the current manufacturer-dealership model fosters. For example, if a dealer either takes too long to respond or responds poorly to a customer enquiry, 80% of prospective customers will leave, either looking for another dealer (48%), look for another car brand (14%), or look for both another dealer and car brand (18%)(Source: Capgemini cars online 2014).
Manufacturers: innovators and trendsetters
It is clear that the repercussions of a poor customer experience punish both manufacturer and dealer. However, individual dealerships lack the resources to put the appropriate systems in place. With the insights that data can provide along with the benefits of modern technology, manufacturers need to become the powerhouses behind implementing a universal system that personalises, modernises and makes more efficient the car purchase experience.
When a customer enters a dealership, staff should be able to search their names on an up-to-date, intuitive system, where all of their details and preferences are available. This allows the transition from manufacturer to dealership to become a seamless, hassle-free process. Being able to anticipate a customer’s individual needs makes them feel special, shifting their position from anonymous commodity to valued, well-known client. Manufacturers can provide these systems.
Such systems need to be two-way, however, with data being passed back from the dealer to the manufacturer. In the past, dealers viewed manufacturers as direct competition, fearing a direct-sales model such as the one Tesla has adopted. While the right data platform is important, a co-operative relationship is vital for the survival of both dealer and manufacturer.
Manufacturers, now with insights into individual customer’s journeys, can then pick up the mantle to ensure brand advertising is relevant to where the customer is in their journey, and marketing spent is not wasted on either lost customers, or customers who have already purchased.
Where Others Have Succeeded
General Motors (GM), for example, are making use of geographic information systems and big data analytics to optimise their dealership performance. They’ve developed platforms to collect useful, local insights on customers, which are then implemented in various dealerships around the world. This allow dealers to handle customers in a more personal and relevant way, ultimately boosting brand loyalty and therefore revenues.
Not only that, General Motors have revolutionised the customer experience with their new ‘Shop-Click-Drive’ program. This allows the majority of the purchasing process to be completed online, including home vehicle delivery, cutting time-consuming visits to the dealership. However, 99% of customers still delivered to the dealer, indicating that they still valued their services. As GM’s vice president, Kurt McNeil said, Shop-Click-Drive “…combines the convenience of online shopping with the personal service of a neighbourhood dealership”.
How successful have these innovative, future-oriented practices really been? GM are certainly doing far better after their bankruptcy in 2009, experiencing a record-breaking profit in 2011. This IT overhaul has been an important step towards becoming more efficient, relevant, and inevitably profitable for the company, and their newfound success is testament to that.
An increasing number of organisations across a spectrum of industries already have such systems in place to great effect. For example, the corner stone of the hotel industry is connectivity of this data. It is no secret that most major hotel chains own very few (<1% in some cases) of the hotels within their group, and instead operate a franchise model. Despite this, they can connect the various booking, CRM and online systems across all their hotels to ensure the details of the customer are always available at the right time to ensure the right, consistent brand experience. This is regardless of if the customer is physically in a hotel or on the website.
If key players in the hotel industry can develop seamless tools and systems, connecting thousands of franchised hotels via a single platform, there’s no reason the automotive retailing industry can’t share in that success.
Manufacturers therefore need to implement a foundational data layer, whereby all necessary data is passed to and from dealers freely and in real time, along with a rich, intuitive presentation layer that can be personalised and used by the dealer to continue the online journey in the real world.
In fact, if manufacturers hope to stay competitive, a shift towards this new model is crucial, where data transfer between dealership and manufacturer is valuable and continuous. It is not the customers of the future who demand an intuitive process, seamless connectivity and personalised service. Customers demand that change now, and businesses – both manufacturers and dealerships – who adapt quickly will be rewarded with their continued loyalty and business in a rapidly changing industry.
Join us at the Adobe Summit in London on the 29th of April, where we’ll be hosting the first ever Automotive Track, discussing the shifting challenges that the automotive industry faces today. More details at: http://summit.adobe.com/emea/sessions/at-a-glance/
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